Forexpros - European stock markets were down sharply on Tuesday, one day after suffering its biggest one-day decline since March 2009, as mounting fears over the global economic outlook prompted investors to shun riskier assets.
During European morning trade, the EURO STOXX 50 fell 2.1%, France's CAC 40 tumbled 1.7%, while Germany's DAX 30 plunged 3.5%.
European equities came off their earlier lows, after the DAX index dropped as much as 6% earlier in the session, while the CAC index retreated nearly 3.4%.
But investors remained on edge after the Dow Jones Industrial Average suffered its sixth-biggest drop on record on Monday, while Asian shares were also down heavily.
Shares in the financial sector, many of which have large exposure to U.S. Treasuries, were broadly lower.
German lenders Deutsche Bank and Commerzbank sank 5.2% and 2.4% respectively, while France's BNP Paribas slumped 2.7% and Societe Generale shares lost 2.8%.
Shares in German utility RWE plunged 6% after reporting a 22% drop in first-half net profit, citing pressure from the decision by the German government to phase out nuclear power. The downbeat earnings prompted the company to lower its full-year earnings forecast.
In London, the commodity-heavy FTSE 100 fell 2.1% as shares in raw material producers performed poorly, amid concerns over a slowdown in global demand.
Oil producers British Petroleum and Royal Dutch Shell saw shares tumble 2.9% and 4.1% respectively, mining giant BHP Billiton retreated 1.5%, while silver producer Fresnillo saw shares plunge 7%.
Financials were also down, tracking their global counterparts lower. Royal Bank of Scotland shares plummeted 8.3%, Barclays lost 5.4%, while HSBC Holdings fell 5.9%.
Meanwhile, U.S. equity futures pared sharp losses ahead of the Federal Reserve's rate announcement. The Dow Jones Industrial Average futures pointed to a loss of 0.5%, the S&P 500 futures shed 0.45%, while the Nasdaq 100 futures declined 0.5%.
Later in the day, the U.S. was to publish preliminary data on nonfarm productivity and labor costs.
In addition, the Federal Reserve was to announce the federal funds rate. The announcement will be followed by the bank's rate statement, which could provide hints regarding further monetary easing.